Sugar contracts slashed to ease surplus burden

Sugar-beet growers are to be hit with a significant cut in their contract tonnages for 2006, as the EU struggles to cope with a mounting surplus and limited export possibilities.

EU agriculture commissioner Mariann Fischer Boel told this week’s farm council in Brussels that she was planning the cut to comply with last year’s World Trade Organisation ruling.

That limits the EU to just 1.273m tonnes of subsidised exports a year and takes effect from May.

The reform of the EU sugar regime agreed in November 2005 is supposed to deal with this surplus by introducing a voluntary restructuring scheme to encourage inefficient factories to close.

But the reform does not kick in until July 2006, and even then it will take a year or two to deliver the required reduction in EU output.

Faced with this dilemma, and spurred on by a desire to start the new regime without a massive overhang of sugar, Mrs Fischer Boel said quotas would have to be cut.

Putting surplus sugar into storage would only push up costs and lead to imbalance in the market later on, she told EU farm ministers.

Mrs Fischer Boel would not be drawn on the scale of the cut, avoiding press questions after the meeting.

It is understood, however, that the commission is forecasting a sugar surplus of between 2m tonnes and 3m tonnes, suggesting a quota cut of between 10% and 15%.

The plan won the support of Austria, Belgium, Denmark, France, Germany, the Netherlands, Sweden and the UK, said a council spokesman.

“But the Latvian, Finnish, Lithuanian, Hungarian and Irish delegations suggested to apply the cut only to B quota sugar used for exports and eligible for refunds,” he added.

Either way, it seems certain there will be enough support to confirm the quota cut when it is put to EU farm ministers in February.

NFU senior sugar beet advisor Helen Kirkman said she regretted that, after the radical reform agreement, any quota cut was necessary.

But it was probably the lesser of two evils compared with a withdrawal of sugar which would only have to be released later in the day.

“We are adamant, however, that any quota cut must be temporary,” she said.

“And we insist that it should be based on the existing co-efficient, which takes account of the UK’s smaller B quota, leading to a lesser cut.”

Mrs Fischer Boel confirmed that the cut would be for one year only, to help with the transition to the new regime.

She also said she would publish the proposal at the end of January, to give farmers more time to plan their spring planting.

Need a contractor?

Find one now